Kids who start businesses learn the value of money along the way

From hot-chocolate stands to dog walking to helping people with computers, kids can start their own businesses — and learn about the value of money along the way.

On a chilly day last November, 5-year-old Sylvia Fordham caught the business bug.

“She wanted to have a lemonade stand to make money,” says her mother, Jennifer. “But it was freezing outside. I told her I didn’t think anyone would want a cold drink on a cold day, so I suggested she try something else.”

A few hours — and one trip to the grocery store — later, Sylvia’s stand was up and running, serving hot chocolate and homemade cookies to her Baltimore neighbors.

Sylvia’s entrepreneurial spirit is common. A 2007 Harris Interactive poll found that 40 percent of kids ages 8 to 21 are interested in starting their own businesses someday.

Many of those kids will get their starts in business even before they’re able to drive. Armed with the right tools, parents can help foster entrepreneurship at any age.

Pick a job

The first step in starting a business is to figure out what that enterprise will be.

If your child is interested in starting a business, explore the child’s skills and interests, then identify a business need that matches, suggests Harold Rappaport, chair of the Greater Baltimore chapter of SCORE, an organization dedicated to entrepreneur education.

“The most important thing is to find an outlet suitable for your kid,” he says. “Look at the capabilities of your child. Look for a need that can be fulfilled with their skills and ability. Use that as the basis to start your business.”

When Luke Abell, now 17, was 8, he set up “Luke’s Snack Shack” at his local pool. “The pool didn’t have a snack shack, so I thought I’d take advantage. I went to Sam’s Club and bought snacks in bulk. I learned a lot about money and profit.”

After a few years, Abell’s success bred competition. Eventually, the pool banned snack shacks altogether, but at that point Abell was already moving on to his next project: a technology consulting company called Luke Tech.

“When I was 10, I was pretty good at fixing computers,” he says. “I started with just friends and family, but then other people started hiring me.”

Over the next few years, the Baltimore teenager explored different interests within the field of technology. “Video production, websites, IT — even if the passion I’m interested in isn’t something I can make a business out of, it’s helpful,” he says. “The more I know, the more attractive I am to clients.”

Today, the Baltimore teenager runs the technology consulting and repair firm Abell Tech, with help from his older brother, Austin.

Smooth operations

With a business focus selected, the down-and-dirty work starts. Children, especially young ones, need guidance from their parents regarding how to actually run a business.

After Sylvia Fordham decided to start a hot-chocolate stand, her mother took her shopping for supplies. “I asked her what we would need, and she insisted on marshmallows. So I suggested we buy hot drink cups and asked her to decide how many to buy. I asked her what she thought would go with hot chocolate, and she said it had to be homemade chocolate-chip cookies.”

During their trip to the grocery store, Jennifer Fordham footed the bill for Sylvia’s supplies. Because of her young age, “I didn’t explain that the profit margin wasn’t that great,” says Jennifer.

Parents of young entrepreneurs are frequently called upon to invest in their kids’ ventures. “Parents have to decide how far they are willing to go to support their kids, time-wise and financially,” says Rappaport.

Sell it

With their products purchased, Sylvia and Jennifer’s next conversation focused on marketing. “I told her we needed to bring people to the stand, so we had to make a sign that would make people want to stop.” Sylvia suggested drawing a cup with steam and, with help from her mom, wrote “hot chocolate” and “cookies” on her sign.

Towson High School senior Madison Jacobson runs a busy baby-sitting business, thanks in part to her mother’s networking efforts. “My mom emailed the Stoneleigh community baby-sitting co-op,” says Jacobson. Next thing she knew, she had a few jobs, which led to even more work.

Navigating the legal landscape

Parents can also be invaluable when it comes to watching out for potential pitfalls. “In this day and age, there are always legal issues,” warns Rappaport, “especially when food is involved. Almost every retail business has licensing requirements, and there’s the issue of liability. People are probably reluctant to sue a kid, but there’s always some crazy person out there.”

In 2011, Maryland lemonade stands made national news when Montgomery County temporarily shut down a stand run by kids raising money to fight pediatric cancer. The county ultimately waived a $500 fine and allowed the stand to reopen in a slightly different location, citing traffic and safety concerns.

But the message remained: Before going public with a business, even kids need to check the law books.

Manage the outcome

All parents hope that their children will be successful. But succeeding in business requires taking risks — that sometimes fail.

“You can’t be afraid to fail,” says Rappaport. “I think entrepreneurs are more motivated and higher risk-takers than the general public. If your child is afraid of failure, avoid starting a business. But if not, encourage them. If they succeed, great. If not, try again. You learn more from failure than success.”

And if the child is successful, he or she will require parental advice to figure out how to use or save profit and how to move forward with the business.

For Luke Abell’s parents, that meant allowing their son to leave the traditional school setting so he could focus on his business. “I was always interested in technology, and it was tough for me to focus in school,” he says. “All I wanted to do was work on my business.”

Starting with what would have been his sophomore year in high school, Abell switched to a home-school program, taking classes at Essex Community College, and focusing on building Abell Tech.

With several successful companies under his belt, Abell believes he’s made the right decision regarding schooling. “If you want to run a successful business when you’re young,” he says, “you have to mature a little quicker. Parents need to have an open mind about the possibilities.

“Don’t be afraid to jump in and try it,” he says. “Once you see results, it’s really exciting.”

Starter businesses

Kids with an itch to start their own businesses often start with small local ventures like these:

• Lawn service: Leaf-raking in the fall and general cleanup after storms are good jobs for kids of all ages. Older children also can cut grass and shovel snow.

• Baby-sitting: This is a tried-and-true starter job. Many babysitters start young, gaining experience as mother’s helpers before taking certification classes and baby-sitting on their own.

• Pet-sitting: Watching pets for neighbors on vacation and walking dogs for clients who work long days is a great way for animal lovers to learn responsibility.

• Lemonade & snack stand: Running a snack stand is an excellent way to help children of all ages learn about the importance of location and the concept of profit-and-loss — with a small financial commitment from parents.

• Yard sale: Selling gently used books and toys as a part of a community event teaches kids about marketing and sales. More ambitious and older kids may even enjoy scouting items at flea markets or auctions to resell on auction websites like eBay.

• Computer assistance: From checking for viruses to scanning old photos, kids can take advantage of their tech savviness, marketing their abilities to relatives and neighbors without free time or computer skills.

Online resources

Before your child launches a business, check out these websites for guidance: